Strong Alkaline Sales Drive Rayovac Second Quarter Results

-- Alkaline sales up 14 percent for the quarter over prior year

-- Hearing aid battery sales up 12 percent for the quarter over prior year

-- Battery market appears to be returning to its strong historical growth

trends

-- Pro-forma diluted EPS meets First Call consensus



Apr 26, 2001, 01:00 ET from Rayovac Corporation

    MADISON, Wis., April 26 /PRNewswire/ -- Rayovac Corp. (NYSE:   ROV) today
 reported strong sales and earnings for the second quarter of Fiscal 2001,
 powered by double-digit growth in general battery and hearing aid battery
 sales.  Category sales results for the quarter also suggest that the battery
 market continues to rebound and is returning to its strong historical growth
 trends.
     For the second quarter of Fiscal 2001, Pro-forma diluted earnings per
 share rose 15 percent to $0.15, up from $0.13 for the same period last year
 and in line with First Call consensus.  Rayovac announced total sales rose
 four percent to $145.2 million compared to $140.1 million for the same period
 last year.  Excluding the foreign exchange impact, sales would have increased
 five percent.  Strong performance in general battery and hearing aid battery
 sales was partially offset by the fall off in sales of specialty batteries to
 OEM customers in the PC, wireless communication and electronics market
 segments.  Operating income before special charges increased six percent to
 $14.0 million, which compares to $13.2 million for the same period last year.
 Pro-forma net income rose 16 percent to $4.3 million.
     "As anticipated, Rayovac achieved strong growth during the second quarter.
 Twelve percent year over year growth in general battery sales and 14 percent
 year over year growth in alkaline sales during the period attest to Rayovac's
 position as one of the leaders in the battery marketplace," said Dave Jones,
 Rayovac chairman and CEO.  "Importantly, the market data suggests that the
 battery category is returning to its historic annual growth rate of six to
 seven percent in recent years."
     Rayovac's general battery dollar share continues its strong growth trend
 and is outpacing the industry, according to data provided by A.C. Nielsen for
 the 12 weeks ended April 7, 2001.  Rayovac's total domestic general battery
 dollar volume increased over 12 percent versus a year ago, and our market
 share now stands at 14.1 percent.  This compares to the general battery market
 that grew seven percent during this period.  In the alkaline segment,
 Rayovac's dollar volume for this 12 week period increased 12 percent versus
 prior year, as compared to a seven percent growth for the alkaline market.
 
     Second Quarter Sales Results
     Driving the sales increase during the second quarter was the strong growth
 in both general batteries and hearing aid batteries.  Year over year total
 general battery sales were up 12 percent led by alkaline sales up 14 percent,
 rechargeables up 16 percent and heavy duty sales up seven percent.  Hearing
 aid battery sales were up 12 percent for the second quarter versus prior year,
 driven by strong North America sales.  This is the second straight quarter of
 strong year over year sales growth for hearing aid batteries.
     The gains in total general batteries and hearing aid battery sales were
 offset somewhat by a $5.7 million decline in specialty battery sales and a
 $2.8 million decrease in lighting products sales.  The dramatic softening of
 the computer and mobile communications market segments had a ripple effect on
 specialty batteries sales.  Lingering affects of not being able to repeat the
 prior year's Y2K buying binge and a decline in lantern battery sales reduced
 lighting product sales to $13.8 million in the quarter.
     In North America, total sales increased four percent to $106.0 million.
 Total general battery sales were up 15 percent for the quarter with alkaline
 sales up 11 percent, and rechargeables up 19 percent.  In Latin America, total
 sales were up six percent year over year with alkaline battery sales almost
 double the year ago period.  In Europe/Rest of World sales were $12.6 million,
 down four percent from the year ago period.  Excluding the foreign exchange
 impact, sales would have increased four percent versus a year ago.
 
     Six-Month Results
     For the six months ended April 1, 2001, sales were $328.8 million, down
 six percent from $351.5 million for the same period of 2000.  Strong second
 quarter sales reversed the Company's first quarter sales decline which
 reflected retailer holiday inventory adjustments, inability to repeat the
 previous year's Y2K buying binge and the lack of adverse weather conditions
 leading into the holiday buying season.
     Operating income before special charges was $36.7 million compared to
 $42.7 million for the same six month period last year.  Pro-forma net income
 was $13.1 million and Pro-forma diluted earnings per share were $0.46.
 
     Restructuring
     During the first quarter, Rayovac announced an anticipated $18 million
 pre-tax charge to cover the cost of a global restructuring program.  The
 Company announced domestic restructuring initiatives that included closing its
 lantern battery and flashlight assembling plant in Wonewoc, Wis.  The
 international restructuring initiatives, which were implemented in the second
 quarter, included closing its zinc carbon battery manufacturing plant in
 Honduras, eliminating uneconomic manufacturing operations at its Mexico City
 plant and eliminating some administrative positions in its European locations.
     After further review of its business, Rayovac will increase its
 anticipated charge for its global restructuring by approximately $2 million,
 raising the total pre-tax charge to be incurred this fiscal year to $20
 million.  This additional increase relates to the elimination of
 administrative positions throughout its global operations as a result of
 business process redesign initiatives.  Since the announcement of the
 restructuring in January 2001, approximately 510 positions or 15 percent of
 the global workforce have been eliminated.  Total cash costs of the
 restructuring are now expected to be approximately $10 million with estimated
 annual savings at $11-12 million when fully implemented beginning in fiscal
 year 2002.
     With these restructuring initiatives, the Company will improve overall
 operating efficiencies, match manufacturing capacity to market demands and
 better utilize the Company's resources.
 
     Restatement of Financial Results
     The Company has adjusted its financial statements to reflect the consensus
 reached by the Emerging Issues Task Force (EITF) of the Financial Accounting
 Standards Board on EITF 00-22, Issue No. 3, which addresses volume-based sales
 incentive offers.  The pronouncement requires the reclassification of these
 selling expenses to net sales.  The EITF stated this issue should be applied
 no later than quarters ending after February 15, 2001, thus the implementation
 in our second fiscal quarter.  This reclassification does not change the
 Company's operating income, net income or net income per common share.  See
 enclosed attachment for restated financial numbers for current year and prior
 year.
     Rayovac is one of the world's leading battery and lighting device
 companies and according to A.C. Nielsen data, the fastest growing battery
 manufacturer in the U.S.  The Company also markets the number one selling
 rechargeable brand of battery and is the world leader in hearing aid
 batteries.  Rayovac trades on the New York Stock Exchange under the ROV
 symbol.
 
     Certain matters discussed in this news release, with the exception of
 historical matters, are forward-looking statements within the meaning of the
 Private Litigation Reform Act of 1995.  These statements are subject to a
 number of risks, uncertainties and other factors that could cause results to
 differ materially from those anticipated as of the date of this release.
 Actual results may differ materially from these statements as a result of (1)
 changes in external competitive market factors, such as introduction of new
 product features or technological developments, development of new competitors
 or competitive brands or competitive promotional activity or spending, (2)
 unanticipated changes in consumer demand for the various types of consumer
 batteries, (3) unanticipated changes in the general economic conditions where
 we do business, such as stock market prices, interest rates, inflation and raw
 material costs, and (4) various other factors, including those discussed
 herein and those set forth in the Company's most recent Annual Report on Form
 10-K.
 
     Attached
     Pro-forma Financial Data
     Condensed Consolidated Statements of Operations & Supplemental Financial
      Data
     Fact Sheet - Financial Summary
     Restated Financial Results
 
 
                              RAYOVAC CORPORATION
                            Pro-forma Financial Data
   For the three month and six month periods ended April 1, 2001 and April 2,
                                      2000
                                  (Unaudited)
                    (In millions, except per share amounts)
 
 
 
                                 THREE MONTHS                SIX MONTHS
                             F2001         F2000        F2001         F2000
 
     Net Income                $4.1          $3.7         $2.4         $17.6
 
     Pro-forma adjustments
      (net of tax):
       Special charges         $0.2           $--        $10.7           $--
 
 
          Pro-forma net income $4.3          $3.7        $13.1         $17.6
 
          Pro-forma diluted
           EPS                $0.15         $0.13        $0.46         $0.60
 
     Average shares &
      equivalents outstanding  28.7          29.1         28.7          29.1
 
 
                              RAYOVAC CORPORATION
                Condensed Consolidated Statements of Operations
   For the three month and six month periods ended April 1, 2001 and April 2,
                                      2000
                                  (Unaudited)
                    (In millions, except per share amounts)
 
                            THREE MONTHS                 SIX MONTHS
                       F2001      F2000  INC(DEC)  F2001     F2000  INC(DEC)
                                            %                          %
 
     Net sales         $145.2     $140.1    3.6%   $328.8    $351.5   (6.5%)
     Cost of goods
      sold               75.8       72.7            167.3     183.6
          Gross profit  $69.4      $67.4    3.0%   $161.5    $167.9   (3.8%)
 
     Selling             40.8       39.5             94.8      94.6
     General and
      administrative     11.6       12.0             24.0      25.3
     Research and
      development         3.0        2.7              6.0       5.3
     Total operating
      expenses          $55.4      $54.2           $124.8    $125.2
 
          Operating
           Income
           before
           special
           charges      $14.0      $13.2    6.1%    $36.7     $42.7  (14.1%)
 
     Other special
      charges             0.2         --             16.3        --
     Interest expense
      and other           7.4        7.6             16.5      15.7
 
          Income before
           income taxes  $6.4       $5.6   14.3%     $3.9     $27.0  (85.6%)
 
     Income tax expense   2.3        1.9              1.5       9.4
 
          Net income     $4.1       $3.7   10.8%     $2.4     $17.6  (86.4%)
 
     Average shares
      outstanding        27.6       27.5             27.6      27.5
 
     Basic earnings
      per share         $0.15      $0.13            $0.09     $0.64
 
     Average shares
      and common stock
      equivalents        28.7       29.1             28.6      29.1
 
     Diluted earnings
      per share         $0.14      $0.13            $0.08     $0.60
 
 
    Supplemental Financial Information
 
     EBITDA without
      special charges   $18.8      $17.7            $46.0     $52.4
 
     Total assets                                  $533.3    $507.0
 
     Total debt                                    $310.7    $304.9
 
     Total shareholders'
      equity                                        $81.2     $63.2
 
 
                                    RAYOVAC
                           SECOND QUARTER FISCAL 2001
                                   Fact Sheet
                               Financial Summary
       (in thousands, except per share amounts and market share amounts)
 
                              THREE MONTHS                 SIX MONTHS
                                           Percent                     Percent
                         F'01       F'00   Change    F'01      F'00    Change
     Net Sales         $145.2     $140.1      4%   $328.8    $351.5      -6%
 
     Operating Income
      (Before special
      charges)          $14.0      $13.2      6%    $36.7     $42.7     -14%
 
     Pro-forma Net
      Income             $4.3       $3.7     16%    $13.1     $17.6     -26%
 
     Pro-forma Diluted
      EPS               $0.15      $0.13     15%    $0.46     $0.60     -23%
 
 
     Rayovac dollar
      market share
      (per A.C. Nielsen)
      for the periods
      ended April 7, 2001
                                   12 weeks                     52 weeks
                             Current         Last        Current         Last
                               Year          Year          Year          Year
     General Batteries         14.1          13.4          14.0          13.6
     Alkaline                  11.3          10.9          11.6          11.4
 
 
                                    RAYOVAC
                           Restated Financial Results
                        (Implementation of EITF 00-22)
                                (in thousands)
 
                                                 FY2001
 
                                      Q2                    Six-Months
 
                           Previous      Restated     Previous      Restated
 
     Sales                   $147.6        $145.2       $333.5        $328.8
 
     Gross Profit              71.8          69.4        166.2         161.5
 
     Selling Expenses          43.2          40.8         99.5          94.8
 
     Operating Income
      (Before special
      charges)                $14.0         $14.0        $36.7         $36.7
 
 
                                                 FY2000
 
                                      Q2                     Six-Months
 
                           Previous      Restated     Previous      Restated
 
     Sales                   $142.6        $140.1       $357.4        $351.5
 
     Gross Profit              69.9          67.4        173.8         167.9
 
     Selling Expenses          42.0          39.5        100.5          94.6
 
     Operating Income
      (Before special
      charges)                $13.2         $13.2        $42.7         $42.7
 
                     MAKE YOUR OPINION COUNT - Click Here
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SOURCE Rayovac Corporation
    MADISON, Wis., April 26 /PRNewswire/ -- Rayovac Corp. (NYSE:   ROV) today
 reported strong sales and earnings for the second quarter of Fiscal 2001,
 powered by double-digit growth in general battery and hearing aid battery
 sales.  Category sales results for the quarter also suggest that the battery
 market continues to rebound and is returning to its strong historical growth
 trends.
     For the second quarter of Fiscal 2001, Pro-forma diluted earnings per
 share rose 15 percent to $0.15, up from $0.13 for the same period last year
 and in line with First Call consensus.  Rayovac announced total sales rose
 four percent to $145.2 million compared to $140.1 million for the same period
 last year.  Excluding the foreign exchange impact, sales would have increased
 five percent.  Strong performance in general battery and hearing aid battery
 sales was partially offset by the fall off in sales of specialty batteries to
 OEM customers in the PC, wireless communication and electronics market
 segments.  Operating income before special charges increased six percent to
 $14.0 million, which compares to $13.2 million for the same period last year.
 Pro-forma net income rose 16 percent to $4.3 million.
     "As anticipated, Rayovac achieved strong growth during the second quarter.
 Twelve percent year over year growth in general battery sales and 14 percent
 year over year growth in alkaline sales during the period attest to Rayovac's
 position as one of the leaders in the battery marketplace," said Dave Jones,
 Rayovac chairman and CEO.  "Importantly, the market data suggests that the
 battery category is returning to its historic annual growth rate of six to
 seven percent in recent years."
     Rayovac's general battery dollar share continues its strong growth trend
 and is outpacing the industry, according to data provided by A.C. Nielsen for
 the 12 weeks ended April 7, 2001.  Rayovac's total domestic general battery
 dollar volume increased over 12 percent versus a year ago, and our market
 share now stands at 14.1 percent.  This compares to the general battery market
 that grew seven percent during this period.  In the alkaline segment,
 Rayovac's dollar volume for this 12 week period increased 12 percent versus
 prior year, as compared to a seven percent growth for the alkaline market.
 
     Second Quarter Sales Results
     Driving the sales increase during the second quarter was the strong growth
 in both general batteries and hearing aid batteries.  Year over year total
 general battery sales were up 12 percent led by alkaline sales up 14 percent,
 rechargeables up 16 percent and heavy duty sales up seven percent.  Hearing
 aid battery sales were up 12 percent for the second quarter versus prior year,
 driven by strong North America sales.  This is the second straight quarter of
 strong year over year sales growth for hearing aid batteries.
     The gains in total general batteries and hearing aid battery sales were
 offset somewhat by a $5.7 million decline in specialty battery sales and a
 $2.8 million decrease in lighting products sales.  The dramatic softening of
 the computer and mobile communications market segments had a ripple effect on
 specialty batteries sales.  Lingering affects of not being able to repeat the
 prior year's Y2K buying binge and a decline in lantern battery sales reduced
 lighting product sales to $13.8 million in the quarter.
     In North America, total sales increased four percent to $106.0 million.
 Total general battery sales were up 15 percent for the quarter with alkaline
 sales up 11 percent, and rechargeables up 19 percent.  In Latin America, total
 sales were up six percent year over year with alkaline battery sales almost
 double the year ago period.  In Europe/Rest of World sales were $12.6 million,
 down four percent from the year ago period.  Excluding the foreign exchange
 impact, sales would have increased four percent versus a year ago.
 
     Six-Month Results
     For the six months ended April 1, 2001, sales were $328.8 million, down
 six percent from $351.5 million for the same period of 2000.  Strong second
 quarter sales reversed the Company's first quarter sales decline which
 reflected retailer holiday inventory adjustments, inability to repeat the
 previous year's Y2K buying binge and the lack of adverse weather conditions
 leading into the holiday buying season.
     Operating income before special charges was $36.7 million compared to
 $42.7 million for the same six month period last year.  Pro-forma net income
 was $13.1 million and Pro-forma diluted earnings per share were $0.46.
 
     Restructuring
     During the first quarter, Rayovac announced an anticipated $18 million
 pre-tax charge to cover the cost of a global restructuring program.  The
 Company announced domestic restructuring initiatives that included closing its
 lantern battery and flashlight assembling plant in Wonewoc, Wis.  The
 international restructuring initiatives, which were implemented in the second
 quarter, included closing its zinc carbon battery manufacturing plant in
 Honduras, eliminating uneconomic manufacturing operations at its Mexico City
 plant and eliminating some administrative positions in its European locations.
     After further review of its business, Rayovac will increase its
 anticipated charge for its global restructuring by approximately $2 million,
 raising the total pre-tax charge to be incurred this fiscal year to $20
 million.  This additional increase relates to the elimination of
 administrative positions throughout its global operations as a result of
 business process redesign initiatives.  Since the announcement of the
 restructuring in January 2001, approximately 510 positions or 15 percent of
 the global workforce have been eliminated.  Total cash costs of the
 restructuring are now expected to be approximately $10 million with estimated
 annual savings at $11-12 million when fully implemented beginning in fiscal
 year 2002.
     With these restructuring initiatives, the Company will improve overall
 operating efficiencies, match manufacturing capacity to market demands and
 better utilize the Company's resources.
 
     Restatement of Financial Results
     The Company has adjusted its financial statements to reflect the consensus
 reached by the Emerging Issues Task Force (EITF) of the Financial Accounting
 Standards Board on EITF 00-22, Issue No. 3, which addresses volume-based sales
 incentive offers.  The pronouncement requires the reclassification of these
 selling expenses to net sales.  The EITF stated this issue should be applied
 no later than quarters ending after February 15, 2001, thus the implementation
 in our second fiscal quarter.  This reclassification does not change the
 Company's operating income, net income or net income per common share.  See
 enclosed attachment for restated financial numbers for current year and prior
 year.
     Rayovac is one of the world's leading battery and lighting device
 companies and according to A.C. Nielsen data, the fastest growing battery
 manufacturer in the U.S.  The Company also markets the number one selling
 rechargeable brand of battery and is the world leader in hearing aid
 batteries.  Rayovac trades on the New York Stock Exchange under the ROV
 symbol.
 
     Certain matters discussed in this news release, with the exception of
 historical matters, are forward-looking statements within the meaning of the
 Private Litigation Reform Act of 1995.  These statements are subject to a
 number of risks, uncertainties and other factors that could cause results to
 differ materially from those anticipated as of the date of this release.
 Actual results may differ materially from these statements as a result of (1)
 changes in external competitive market factors, such as introduction of new
 product features or technological developments, development of new competitors
 or competitive brands or competitive promotional activity or spending, (2)
 unanticipated changes in consumer demand for the various types of consumer
 batteries, (3) unanticipated changes in the general economic conditions where
 we do business, such as stock market prices, interest rates, inflation and raw
 material costs, and (4) various other factors, including those discussed
 herein and those set forth in the Company's most recent Annual Report on Form
 10-K.
 
     Attached
     Pro-forma Financial Data
     Condensed Consolidated Statements of Operations & Supplemental Financial
      Data
     Fact Sheet - Financial Summary
     Restated Financial Results
 
 
                              RAYOVAC CORPORATION
                            Pro-forma Financial Data
   For the three month and six month periods ended April 1, 2001 and April 2,
                                      2000
                                  (Unaudited)
                    (In millions, except per share amounts)
 
 
 
                                 THREE MONTHS                SIX MONTHS
                             F2001         F2000        F2001         F2000
 
     Net Income                $4.1          $3.7         $2.4         $17.6
 
     Pro-forma adjustments
      (net of tax):
       Special charges         $0.2           $--        $10.7           $--
 
 
          Pro-forma net income $4.3          $3.7        $13.1         $17.6
 
          Pro-forma diluted
           EPS                $0.15         $0.13        $0.46         $0.60
 
     Average shares &
      equivalents outstanding  28.7          29.1         28.7          29.1
 
 
                              RAYOVAC CORPORATION
                Condensed Consolidated Statements of Operations
   For the three month and six month periods ended April 1, 2001 and April 2,
                                      2000
                                  (Unaudited)
                    (In millions, except per share amounts)
 
                            THREE MONTHS                 SIX MONTHS
                       F2001      F2000  INC(DEC)  F2001     F2000  INC(DEC)
                                            %                          %
 
     Net sales         $145.2     $140.1    3.6%   $328.8    $351.5   (6.5%)
     Cost of goods
      sold               75.8       72.7            167.3     183.6
          Gross profit  $69.4      $67.4    3.0%   $161.5    $167.9   (3.8%)
 
     Selling             40.8       39.5             94.8      94.6
     General and
      administrative     11.6       12.0             24.0      25.3
     Research and
      development         3.0        2.7              6.0       5.3
     Total operating
      expenses          $55.4      $54.2           $124.8    $125.2
 
          Operating
           Income
           before
           special
           charges      $14.0      $13.2    6.1%    $36.7     $42.7  (14.1%)
 
     Other special
      charges             0.2         --             16.3        --
     Interest expense
      and other           7.4        7.6             16.5      15.7
 
          Income before
           income taxes  $6.4       $5.6   14.3%     $3.9     $27.0  (85.6%)
 
     Income tax expense   2.3        1.9              1.5       9.4
 
          Net income     $4.1       $3.7   10.8%     $2.4     $17.6  (86.4%)
 
     Average shares
      outstanding        27.6       27.5             27.6      27.5
 
     Basic earnings
      per share         $0.15      $0.13            $0.09     $0.64
 
     Average shares
      and common stock
      equivalents        28.7       29.1             28.6      29.1
 
     Diluted earnings
      per share         $0.14      $0.13            $0.08     $0.60
 
 
    Supplemental Financial Information
 
     EBITDA without
      special charges   $18.8      $17.7            $46.0     $52.4
 
     Total assets                                  $533.3    $507.0
 
     Total debt                                    $310.7    $304.9
 
     Total shareholders'
      equity                                        $81.2     $63.2
 
 
                                    RAYOVAC
                           SECOND QUARTER FISCAL 2001
                                   Fact Sheet
                               Financial Summary
       (in thousands, except per share amounts and market share amounts)
 
                              THREE MONTHS                 SIX MONTHS
                                           Percent                     Percent
                         F'01       F'00   Change    F'01      F'00    Change
     Net Sales         $145.2     $140.1      4%   $328.8    $351.5      -6%
 
     Operating Income
      (Before special
      charges)          $14.0      $13.2      6%    $36.7     $42.7     -14%
 
     Pro-forma Net
      Income             $4.3       $3.7     16%    $13.1     $17.6     -26%
 
     Pro-forma Diluted
      EPS               $0.15      $0.13     15%    $0.46     $0.60     -23%
 
 
     Rayovac dollar
      market share
      (per A.C. Nielsen)
      for the periods
      ended April 7, 2001
                                   12 weeks                     52 weeks
                             Current         Last        Current         Last
                               Year          Year          Year          Year
     General Batteries         14.1          13.4          14.0          13.6
     Alkaline                  11.3          10.9          11.6          11.4
 
 
                                    RAYOVAC
                           Restated Financial Results
                        (Implementation of EITF 00-22)
                                (in thousands)
 
                                                 FY2001
 
                                      Q2                    Six-Months
 
                           Previous      Restated     Previous      Restated
 
     Sales                   $147.6        $145.2       $333.5        $328.8
 
     Gross Profit              71.8          69.4        166.2         161.5
 
     Selling Expenses          43.2          40.8         99.5          94.8
 
     Operating Income
      (Before special
      charges)                $14.0         $14.0        $36.7         $36.7
 
 
                                                 FY2000
 
                                      Q2                     Six-Months
 
                           Previous      Restated     Previous      Restated
 
     Sales                   $142.6        $140.1       $357.4        $351.5
 
     Gross Profit              69.9          67.4        173.8         167.9
 
     Selling Expenses          42.0          39.5        100.5          94.6
 
     Operating Income
      (Before special
      charges)                $13.2         $13.2        $42.7         $42.7
 
                     MAKE YOUR OPINION COUNT - Click Here
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 SOURCE  Rayovac Corporation

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